Quick Answer: A €45,000 salary attracts €8,386.29 of Dutch income tax in 2026. The box 1 charge is €16,198.22, but two credits remove €7,811.93 of it: an algemene heffingskorting of €2,138.41 and an arbeidskorting of €5,673.52. The effective rate is 18.64% after credits against 36.00% before them -- roughly half the Dutch system is delivered through credits rather than rates.
Overview
Dutch income tax looks punishing if you read only the rates. Box 1 starts at 35.75% from the first euro, with no tax-free allowance at all, and reaches 49.50% above €78,426.
Then two large credits are deducted from the tax. The algemene heffingskorting is available to everyone, and the arbeidskorting is available on income from work. Together they are worth €7,811.93 at a €45,000 salary, which turns a 36.00% headline into an 18.64% effective rate.
Both are withdrawn as income rises, and that withdrawal is what actually shapes the Dutch marginal rate curve. The arbeidskorting in particular is a four-band function that rises steeply, plateaus near €45,592, then falls, so modelling it as a flat maximum is wrong at every income except the peak.
How This Is Calculated
Step 1 -- Box 1 tax on the whole of your income, with no allowance:
- 35.75% up to €38,883
- 37.56% from €38,883 to €78,426
- 49.50% above €78,426
Step 2 -- Algemene heffingskorting. €3,115 in full, withdrawn at 6.398% of income above €29,736, reaching nil at €78,426:
Step 3 -- Arbeidskorting, on income from work only, across four bands:
- up to €11,965: 8.324% of income
- to €25,845: €996 + 31.009% of the excess over €11,965
- to €45,592: €5,300 + 1.950% of the excess over €25,845
- to €132,920: €5,685 − 6.510% of the excess over €45,592
- above €132,920: nil
Step 4 -- Deduct the credits. They are non-refundable, so they can reduce the charge to zero but never below it.
Worked Example
€45,000 salary:
- Box 1: €38,883 × 35.75% = €13,900.67, plus €6,117 × 37.56% = €2,297.55 → €16,198.22
- Algemene heffingskorting: €3,115 − 6.398% × €15,264 = €2,138.41
- Arbeidskorting: €5,300 + 1.950% × €19,155 = €5,673.52
- Tax due: €16,198.22 − €7,811.93 = €8,386.29
- Income after tax: €36,613.71
- Effective rate 18.64%, against 36.00% before credits
€90,000 salary:
- Above €78,426, so the general credit is fully withdrawn and the 49.50% top rate applies
- Tax due: €31,688.11
The same €45,000 as pension income:
- Pension does not qualify for the arbeidskorting, so only the general credit applies
- Tax due: €14,059.81, some €5,673 more than the identical amount earned from work
What This Does Not Account For
- Box 2 and box 3. Substantial shareholding income and wealth are taxed separately. The dedicated box 3 calculator covers the latter.
- The 30% ruling for qualifying incoming employees, which exempts part of salary from tax.
- AOW-age taxpayers, who face lower combined rates in the first bracket and different credit amounts. This models those below AOW age.
- Mortgage interest deduction (eigenwoningforfait and hypotheekrenteaftrek), which has its own calculator.
- Toeslagen -- zorgtoeslag, huurtoeslag, kinderopvangtoeslag and kindgebonden budget -- which are benefits rather than tax and are means-tested separately.
- The inkomensafhankelijke combinatiekorting and other smaller credits for specific circumstances.
- Zelfstandigenaftrek and MKB-winstvrijstelling for the self-employed, which reduce taxable profit before any of this.
- Employer social contributions, which are not deducted from your salary.
Common Pitfalls
- Reading the rates without the credits. A 35.75% starting rate sounds brutal, but the credits are worth €7,811.93 at €45,000. Judging Dutch tax on rates alone overstates it by roughly half.
- Treating the arbeidskorting as a flat €5,685. It is a four-band function. At €20,000 it is €3,487.57, at €45,000 it is €5,673.52, and at €60,000 it has fallen to €4,747.04.
- Expecting a tax-free allowance. There is none. Box 1 taxes the first euro at 35.75%; the equivalent of an allowance is delivered through the general credit instead.
- Applying the arbeidskorting to pension income. It is available on income from work only, and the difference is over €5,600 at a typical income.
- Missing the credit withdrawal in the marginal rate. Between €29,736 and €78,426 the general credit is being withdrawn at 6.398% on top of the statutory rate, so the true marginal rate is meaningfully higher than the bracket suggests.
- Assuming the credits are refundable. They are not. They cannot produce a repayment beyond reducing the charge to zero.
Frequently Asked Questions
Is there a tax-free allowance in the Netherlands?
No. Box 1 taxes income from the first euro at 35.75%. The equivalent relief is delivered through the algemene heffingskorting, a credit deducted from the tax rather than an amount deducted from income.
What is the arbeidskorting worth?
It depends heavily on income. It rises steeply through the lower bands, peaks at about €5,685 around €45,592, then falls at 6.510% of income above that, reaching nil at €132,920. It is available only on income from work.
Why is my effective rate so much lower than the bracket rate?
Because the credits are deducted after the tax is computed. At €45,000 the box 1 charge is 36.00% of income, but the credits bring the effective rate down to 18.64%.
Do pensioners get the arbeidskorting?
No. It applies to income from employment or business only. A pensioner with the same income pays over €5,600 more than someone earning it from work, before considering the separate AOW-age rate differences.
What happens above €78,426?
Two things at once: the top 49.50% rate applies, and the algemene heffingskorting has been fully withdrawn. The combination is why the Dutch system bites hardest just above that point.
Are the credits refundable?
No. They reduce the tax due to a minimum of zero and cannot generate a payment beyond that.
Sources
- Belastingdienst: "Voorlopige aanslag 2026: gebruikte tarieven en heffingskortingen" -- box 1 brackets of 35.75%, 37.56% and 49.50% at €38,883 and €78,426
- Belastingdienst: "Tabel algemene heffingskorting 2026" -- maximum €3,115, withdrawal of 6.398% above €29,736, nil at €78,426
- Belastingdienst: "Tabel arbeidskorting 2026" -- the four bands and the €5,685 maximum for those below AOW age
- All figures verified on 30 August 2026